Here's a video that I recorded while playing, World of Warcraft.
http://www.twitch.tv/tag_simplyfresh/b/377081814
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Quality: 5
Bit-rate: 3000
Buffer: 3000
Audio Codec: AAC
Audio Bit-rate: 96
Base Resolution: 1920 x 1080
Resolution Downscale: None
Frames-per-second: 30
Disable Aero at start-up: Check
Process Priority Class: Normal
x264 CPU Preset: Fast (or Medium if your CPU is super fast. Might give you slightly better image quality)
Bind to interface: *Your IP Address*
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Although, the video I linked above is with "Quality: 6" and "x264 CPU Preset: Medium." The settings I detailed above are my final settings, as I did not notice a different between Fast and Medium. With Fast, I can retain more CPU resources and have smoother game-play and possibly a more reliable and consistent stream. I tested again with my final settings and noticed no difference at all.
I set my final settings to "Quality: 5" just to compensate for the CPU Preset being on "Fast." This should help with improving the pixelation. Even if there is pixelation on my stream, they disappear almost immediately.
The link below shows my final settings:
http://www.twitch.tv/tag_simplyfresh/b/377137239
So far, the viewers I've had, have had no issues watching my stream. I run only Software Capture, and my games on Border-less Mode.
EDIT: Heck, I'm going to try setting Quality to 4 and see what happens.